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ABB Annual Report 2006

Financial summary
Power and productivity for a better world

This is ABB
Rising demand for energy and its impact
on the environment are the defining
challenges of this century.
ABB is tackling these issues by providing
solutions for the secure and energyefficient transmission and distribution of
electricity and for increasing productivity
in industrial, commercial and utility
operations.
Thats why ABB stands for Power and
productivity for a better world.
The ABB Group of companies operates
in around 100 countries and employs
about 108,000 people.
ABB is headquartered in Zurich,
Switzerland. ABB Ltd shares are traded
on the stock exchanges in Zurich,
Stockholm and New York.

Consolidated Financial Statements


Consolidated Income Statements

Year ended December 31 (in millions, except per share data)

Sales of products

2006

2005

2004

$ 20,630

$ 18,664

$ 16,848

Sales of services

3,782

3,348

3,301

Total revenues

24,412

22,012

20,149

Cost of products

(14,968)

(14,096)

(12,925)

Cost of services

(2,573)

(2,309)

(2,316)

(17,541)

(16,405)

(15,241)

Gross profit

6,871

5,607

4,908

Selling, general and administrative expenses

(4,434)

(3,883)

(3,777)

Total cost of sales

Other income (expense), net


Earnings before interest and taxes

149

54

(40)

2,586

1,778

1,091

Interest and dividend income

151

157

151

Interest and other finance expense

(304)

(403)

(360)

2,433

1,532

882

Provision for taxes

(697)

(490)

(338)

Minority interest

(179)

(131)

(102)

1,557

911

442

Income from continuing operations before taxes and minority interest


and cumulative effect of accounting change

Income from continuing operations before cumulative effect of accounting change


Loss from discontinued operations, net of tax
Income (loss) before cumulative effect of accounting change
Cumulative effect of accounting change, net of tax
Net income (loss)

(167)

(171)

(477)

1,390

740

(35)

(5)

$ 1,390

735

0.45

(35)

Basic earnings (loss) per share:


Income from continuing operations before cumulative effect of accounting change
Loss from discontinued operations, net of tax
Cumulative effect of accounting change, net of tax
Net income (loss)

0.73
(0.08)

(0.09)

0.65

0.71

0.22
(0.24)

0.36

0.44

(0.02)

Diluted earnings (loss) per share:


Income from continuing operations before cumulative effect of accounting change

Loss from discontinued operations, net of tax

(0.08)

Cumulative effect of accounting change, net of tax


Net income (loss)
See accompanying Notes to the Consolidated Financial Statements.

(0.08)

0.63

0.36

0.22
(0.24)

(0.02)

Consolidated Balance Sheets

at December 31 (in millions, except share data)

Cash and equivalents


Marketable securities and short-term investments

2006

2005

$ 4,262

$ 3,221

528

368

Receivables, net

7,276

6,405

Inventories, net

3,880

3,006

Prepaid expenses

252

250

Deferred taxes

577

473

Other current assets

238

187

Assets held for sale and in discontinued operations

164

262

17,177

14,172

Total current assets


Financing receivables, net

555

645

Property, plant and equipment, net

2,811

2,547

Goodwill

2,581

2,479

Other intangible assets, net

309

347

Prepaid pension and other employee benefits

375

601

Investments in equity method companies

636

618

Deferred taxes

523

628

Other non-current assets

175

239

Total assets

$ 25,142

$ 22,276

Accounts payable, trade

$ 3,936

$ 3,203

Accounts payable, other

1,184

1,171

Short-term debt and current maturities of long-term debt


Advances from customers
Deferred taxes

122

169

1,526

987

227

183

Provisions and other

3,003

2,635

Accrued expenses

1,941

1,876

Asbestos obligations

154

1,128

Liabilities held for sale and in discontinued operations

283

370

12,376

11,722

3,160

3,933

Pension and other employee benefits

885

1,130

Deferred taxes

769

691

Asbestos obligations

307

Other liabilities

1,156

976

Total liabilities

18,653

18,452

451

341

Capital stock and additional paid-in capital

4,514

3,121

Retained earnings

3,647

2,460

Accumulated other comprehensive loss

(2,019)

(1,962)

Total current liabilities


Long-term debt

Minority interest
Stockholders equity:

Less: Treasury stock, at cost (8,782,721 and 11,531,106 shares at December 31, 2006
and 2005, respectively)
Total stockholders equity
Total liabilities and stockholders equity
See accompanying Notes to the Consolidated Financial Statements.

(104)

(136)

6,038

3,483

$ 25,142

$ 22,276

Consolidated Statements of Cash Flows

Year ended December 31 (in millions)

2006

2005

2004

Operating activities:
Net income (loss)

$ 1,390

735

(35)

Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization

570

597

Provisions, net

243

466

88

(4)

(62)

55

Pension and postretirement benefits

633

Deferred taxes

113

38

Net gain from sale of property, plant and equipment

(76)

(44)

(36)

Income from equity accounted companies

(95)

(109)

(87)

Minority interest

179

131

102

Loss on sale of discontinued operations


Other

16

63

190

159

264

Changes in operating assets and liabilities:


Marketable securities (trading)

43

Trade receivables

(594)

(892)

(160)

Inventories

(512)

(328)

(74)

Trade payables

388

26

(63)

Advances from customers

461

161

(22)

Other assets and liabilities, net

(314)

117

128

1,939

1,012

902

Net cash provided by operating activities


Investing activities:
Changes in financing receivables
Purchases of marketable securities and short-term investments (other than trading)
Purchases of property, plant and equipment and intangible assets
Acquisitions of businesses (net of cash acquired)
Proceeds from sales of marketable securities and short-term investments (other than trading)
Proceeds from sales of property, plant and equipment
Proceeds from sales of businesses (net of cash disposed)
Net cash provided by (used in) investing activities

67

229

176

(4,743)

(1,915)

(2,877)

(536)

(456)

(543)

(3)

(27)

(24)

4,366

1,833

2,317

128

117

123

27

(97)

1,182

(694)

(316)

354

(104)

Financing activities:
Net changes in debt with maturities of 90 days or less

(26)

(9)

Increases in debt

151

155

265

Repayment of debt

(189)

(978)

(2,913)

Payments made upon induced bond conversion

(72)

Payments made upon bond exchange

(111)

Treasury and capital stock transactions

47

35

(36)

Payment of dividends

(203)

11

(99)

43

Net cash used in financing activities

(392)

(896)

(2,745)

Effects of exchange rate changes on cash and equivalents

184

(259)

74

Other

Adjustment for the net change in cash and equivalents in assets held for sale
and in discontinued operations
Net change in cash and equivalents continuing operations
Cash and equivalents beginning of period

14

298

1,041

(445)

(1,117)

3,221

3,666

4,783

Cash and equivalents end of period

$ 4,262

$ 3,221

$ 3,666

Interest paid

274

332

382

Taxes paid

594

325

379

See accompanying Notes to the Consolidated Financial Statements.

ABB Ltd Shareholder information

CHF

Price trend for ABB Ltd shares, Zurich


Swiss Performance Index rebased, Zurich

22
21
20
19
18
17
16
15
14
13
12

1/06

2/06

3 /06

4/06

5/06

6/06

7/06

8/06

9/06

10/06

11/06

12/06

7/06

8/06

9 /06

10/06

11/ 06

12/06

7/06

8/06

9/06

10/06

11/ 06

12/06

SEK

Price trend for ABB Ltd shares, Stockholm


OMX Index rebased, Stockholm

130
120
110
100
90
80
70

1/06

2/06

3/06

4/06

5/06

6/ 06

USD

Price trend for ABB Ltd shares, New York


Dow Jones Index rebased, New York

19
18
17
16
15
14
13
12
11
10
9

1/06

2/06

3/06

4/06

5/06

Stock Exchange listings


Ticker symbols for ABB Ltd
SWX Swiss Exchange (virt-x)
Stockholmsbrsen
New York Stock Exchange (NYSE)

6/06

Credit rating for ABB Ltd as of


February 26, 2007
ABBN
ABB
ABB

Ticker symbols for ABB Ltd at Bloomberg


SWX Swiss Exchange (virt-x)
ABBN VX
Stockholmsbrsen
ABB SS
New York Stock Exchange (NYSE)
ABB US
Ticker symbols for ABB Ltd at Reuters
SWX Swiss Exchange (virt-x)
ABBN.VX
Stockholmsbrsen
ABB.ST
New York Stock Exchange (NYSE)
ABB.N

Standard & Poors


Long-term corporate credit rating:
Long-term senior unsecured debt:
Short-term corporate credit rating:
Watch positive
Moodys
Long-term senior unsecured rating:
Short-term debt rating:
Stable outlook

BBB+
BBB
A-2

Baa1
Prime-2

The credit rating is subject to revision at any time.


For the latest credit ratings please see Moodys and Standard & Poors
web pages.

Share data

Bondholder information
Outstanding public bonds as of February 15, 2007.
Issuer

Due

Bloomberg ticker

Reuters ticker

ABB International Finance Ltd

Original issued principal amount

EUR 500 million

Coupon

9.5% (1)

2008

ABB 9.5 01/15/08

CH014855653=

ABB International Finance Ltd

GBP 200 million

10% (2)

2009

ABB 10 05/29/09

CH014855661=

ABB Ltd

CHF 500 million

3.75% (3)

2009

ABB 3.75 09/30/09

CH896367=S

3.5%

2010

ABB 3.5 09/10/10

CH1653740=S

ABB International Finance Ltd

CHF 1,000 million Convertible

ABB International Finance Ltd

EUR 650 million

6.5%

2011

ABB 6.5 11/30/11

CH018119617=

ABB International Finance Ltd

EUR 700 million

4.625%

2013

ABB 4.625 06/06/13

CH025291581=

(1)
(2)
(3)

Outstanding amount = EUR 77 million


Outstanding amount = GBP 20 million
Outstanding amount = CHF 108 million

Key data
2006

2005

Dividend per share (CHF)

0.24 (1)

0.12

Par value per share (CHF)

2.50

2.50

Votes per share


Earnings per share

(USD) (2)

0.63

0.36

Stockholders equity per share (USD) (3)

2.77

1.71

Cash flow from operations per share (USD) (2)

0.86

0.47

Dividend pay-out-ratio (%)

31%

26%

Weighted average number of shares outstanding (in millions)

2,128

2,029

Diluted weighted average number of shares outstanding (in millions)

2,248

2,138

(1)

Proposed by the Board of Directors and subject to approval by shareholders at the Annual General Meeting on May 3, 2007, in Zurich, Switzerland.
(2) Calculation based on diluted weighted average number of shares outstanding
(3) Calculation based on the number of shares outstanding as of December 31

ABB Ltd Annual General Meeting


The 2007 Annual General Meeting of ABB
Ltd will be held at 10:00 a.m. on Thursday,
May 3, 2007 at the Messe Zurich hall in
Zurich-Oerlikon, Switzerland. The Annual
General Meeting will be held principally in
German and will be translated simultaneously into English and French. Shareholders
entered in the share register, with the right
to vote, by April 23, 2007, are entitled to
participate in the Annual General Meeting.

ABB shareholders calendar 2006


Three-month results 2007
ABB Ltd Annual General Meeting, Zurich
ABB Ltd Information Meeting, Vsters
Six-month results 2007
Nine-month results 2007

April 26
May 3
May 4
July 26
October 25

The ABB Annual Report 2006 consists of an Operational


review, a Financial review and a Sustainability review.
For an additional copy of this or any of the other reviews,
please use the contact information on the back of
this document or download copies from www.abb.com.
The Operational review and a financial summary (contained in the Operational review) are published in English,
German and Swedish. The Financial review is published
in English and German. The Sustainability review is published in English. For all documents in the Annual Report
series, only the English-language version is the binding
version.

Copyright 2007 ABB. All rights reserved.


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ABB Ltd
Corporate Communications
P.O.Box 8131
CH-8050 Zurich
Switzerland
Tel: +41 (0)43 317 7111
Fax: +41 (0)43 317 7958
www.abb.com

ABB Ltd
Investor Relations
P.O.Box 8131
CH-8050 Zurich
Switzerland
Tel: +41 (0)43 317 7111
Fax: +41 (0)44 311 9817